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Triangle Exchange Opportunity- Foreign Currency Exchange

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Bid Ask
ZAR/£ 14.2 14.52
ZAR/$ 10.38 10.56
$/£ 1.33 1.34

Consider the above exchange rates:

a) Do the above exchange rates present an arbitrage opportunity? Explain?

b) Calculate the arbitrage profit assuming an initial investment amount of ZAR 1 million?

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Detailed formula and calculations included for triangle arbitrage opportunity.

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Bid price= lowest price a buyer is willing to pay for an asset
Ask= highest price a seller is willing to sell an asset for

a) Do the above exchange rates present an arbitrage opportunity? Explain?
A triangle arbitrage ...

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